Investment Hazards
In the past one decade, lakhs of gullible investors have lost crores of money, chasing rainbows ( IPOs, teak plantation, chit funds, etc.) sold to them by unscrupulous operators.
Some points to avoid the biggest pitfalls:
Control your greed
High return implies high risk. Ask questions : how can they offer such high rate of return?
Look at the track record
Good name in the industry, interest or dividend track record, promoter holding, intuitional holdings, credit ratings, bonus issue just before IPO, Big order news or big oil field found news, etc.,
Consistency in profitability
Good company should have been growing steadily with no inconsistent spurts in the profits.
The company should be regularly tax and dividend paying one
Any company that has paid out cash must have earned it
Look for credit rating
For company deposits and debentures , choose only companies which gave good ratings. Look for a government-vetted scheme or SEBI stamp.
Don’t get taken in by high incentives
Gifts or incentives that cost Rs100 or Rs 1000 could be the bait for lakhs.
Be wary of hard sell
Be wary of high promises, huge muli media advertisements disproportionate to project size, gifts, posh office, etc., Security sops like post dated cheques mean nothing when the idea is to defraud.
Avoid chain schemes
Remember history repeats
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